3 Ways Small Cap CMOs Can Improve Revenue Performance
One of the great things about working for a relatively small company is that it trains you to be very pragmatic. You’ve basically got to operate and manage all the same tasks and processes as in a bigger shop — only you’ve got much less resource to do it with. To deliver impact, you quickly realize you can only prioritize the absolute essentials. And this is where it gets a bit tricky. Especially when you’re selling complex, big-ticket solutions. Whereas, as a marketer in a big company, you can claim to be successful by exceeding some narrowly-defined KPIs, in smaller shops, that isn’t enough. Here, there’s no real success for anyone unless there’s substantial success for the whole. And this really changes how the CMO needs to think about priorities.
Avoid the volume trap: Move from “demand gen” to “demand identification”
In a smaller company, the top marketer has to take direct responsibility for significant “demand gen.” But success in this area will depend a great deal on avoiding some pretty serious traps. The first is that the industry terminology itself can mislead you — into over-weighting your focus on top-of-funnel volumes. While we may call most of our campaign activities “demand generation,” does anyone really believe that marketing alone can create demand for a complex 6- or 7-figure solution? The real objective of our campaigns is to provide a cost-effective method for identifying and engaging the right people at the right time – people who are already beginning to look for a solution to a business need. When we extend our mental map beyond demand generation, we can see volume thinking for the dangerous trap it can be: If we’re generating high volumes of “leads” that don’t become opportunities, although we may be connecting with people who could one day buy, we’re not actually contributing much real demand to our pipelines. And beyond what we’ve paid to “generate” those leads, we’re adding more excess cost to the process because it takes resources to disqualify them out of the funnel. When we adopt “demand identification” as our goal, we take an important step forward — towards prioritizing better conversion rates and outcomes end-to-end. As CMO, this conversion rate focus has become a critical element of how I can better impact results at our company that everybody cares about.
Understand the difference between tools that help me vs. solutions that impact everyone
If you ask me, one of the more kooky prognostications that came out of the SaaS software revolution was the notion that the CMO would soon be spending more on tech than the CIO. What is true however, is that unlike a lot of departments, marketing has historically controlled a budget with a large variable component. So the SaaS revolution has made it possible for marketers (and everyone else with a budget) to try to buy their way out of their various functional limitations. Herein lies another trap. If we as marketers define our role in terms of marketing-centric measures alone, it’s tempting to try to incrementally improve performance in each of the areas we control. In isolation, a shiny new tool that makes part of our job easier and doesn’t cost too much can seem quite attractive. But when we add the cost of several of these tools together and subtract that from their total contribution to the bottom line, our perception of value is often quite different. Unfortunately, once we’ve got three or more low impact tools in place (and the people to operate them), undoing the implementations becomes appreciably harder. To avoid the tool trap, a CMO should look to identify problems “deeper in the stack.” For example, shifting to conversion rate thinking doesn’t only effect how you do your marketing job, it actually applies up and down the entire demand-capture value chain. When you look to identify problems deeper in the stack, you begin to discover root causes that impact both marketing and sales performance. When you spend budget to solve root causes, you can impact productivity end-to-end — so you’ll get a lot more leverage from the money you have.
Focus on behavior; change it for the better
One of my favorite mentors explained to me that: “Salespeople are like water running down a hill — They’ll usually follow the path of least resistance.” On the one hand, I don’t think that’s so different from most people. On the other, it’s really helped me become a better student of behavior; I work harder to understand what a particular behavior is telling me. In working to improve conversion rates end-to-end, my team and I focus both on better understanding both the behaviors we see in our target accounts and the behaviors necessary for our team as a whole to capitalize on them.
On the account side, as we address penetration issues, we study behavior at multiple levels. We look at the trajectory of a market and our prospect companies’ options in that context. We study their “ownership” status, their current performance and their management’s backgrounds. We closely examine the relevant content being consumed by the people in roles that matter directly to what we sell. This activity matters because it provides us a direct indicator of whether or not they’re in market for what we sell. If there are no clear patterns around who is doing research, it matters little to me whether or not we’re successfully engaging them — because they’re not likely to have a current need. But when we see the indicators of a buyer’s journey in process – many people are active on a specific solution-relevant topic, their roles make sense, they’re located in connected places, they’re looking at our competitors, and more – we really go to work.
When we see activity signals like those, it’s much more information than is ever contained in a single lead. And operating in this conversion-rate centered world, I can’t afford to let real demand like this get by us. That’s why in response to these signals, we ramp our own efforts and work directly with sales on breaking through. We make sure that this behavior of real people at our target accounts guides and, when necessary, even overrides the standard routines. While every salesperson has a set of planned daily and weekly activities, when we see active demand at a target account and alert them to it, they now fully understand the implications and what actions are necessary to take maximum advantage.
This week’s guest post is by author John Steinert, CMO of TechTarget, the global leader in purchase intent-driven marketing and sales services that deliver business impact for enterprise technology companies.